Debbie Austin brings together a list of helpful tips and resources to consider when getting ready to form a limited company.
You’ve done your research, made your checklists and now you’re ready to set up a limited company – seems simple right? Doing it alone can be a daunting task and you may find yourself asking, “Where do I begin?” There are a lot of things to take into consideration when taking the leap which is why many people seek specialist advice.
It's important to remember that your circumstances might differ depending on other business factors. For instance, if you obtain funding through the investor route your company may have SEIS/EIS investors. If this is the case, you may not have obtained all of the shareholder information required. If you feel that your investor situation is more complex, seeking the advice of a professional is an option that can help relieve stress, as well as, save you time and money.
To help you get started on making this significant decision, here's a list of helpful tips along with some resources to assist you a long the way.
First things first: Sole trader vs. limited company
If you’re making the switch, you should probably know the difference. In the simplest terms as a sole trader you are the business, the owner, the manager, and you take on any liabilities personally. A limited company is where you and the business are legally separated. You have a role as a shareholder, but not everything falls on your shoulders.
Before You Start the Paperwork…
The Name Game - Probably the most exciting part of starting a business is picking your name. As a limited company there are a few regulations to keep in mind:
Your name cannot be similar to an existing company name.
It must be available and appropriate, meaning it cannot contain anything offensive. You can find a list of ‘sensitive words and phrases’ on Companies House.
Your company name must include “limited” or “ltd” at the end.
Determine the purpose of your company and your capital requirements (what are you doing & how much will it cost you to do it).
Decide which type of limited company you are setting up. A private limited company is typically a small business like an independent retailer, and a public limited company is typically a larger company with a well-known name.
Choose and list your company officers, this includes: company directors and company secretaries, and others with a significant role in the organisation.
Who are the directors?
Private companies require at least one director, where public companies require at least two directors and a qualified secretary. You must provide the following information for the company directors:
Getting to know your shareholders
Like the directors, you are required to provide certain information for the company shareholders, including:
Registering your company and completing the incorporation process
This is the part where you pull up a comfortable chair, turn on your computer or grab a handy pen and get through the paperwork, or, get professional help. You've found the perfect name, know which type of limited company you're going to be, now it's time to register it with Companies House and incorporate your business. You'll need:
Your company name and a UK address as the company's registered offic
Your completed application to register a company (form IN01), and the registration fee
Congratulations you're incorporated! What's your next step
You should arrange to have an official first board meeting and general meeting to address important company topics like:
Appointment (if appropriate) of a chairperson, managing director, and any additional directors, and approval of any employment contracts
Issue of share certificates and, if appropriate, allotment of further shares
Approval of banking arrangements, including agreeing authorised signatories in respect of the Company’s bank account and passing the resolutions required by the bank
Make sure these following matters are addressed after your incorporation:
Minutes of the first board and general meeting should be prepared
The Company should issue share certificates
The Company’s statutory books should be written up
Shareholders should pay their share capital into the Company’s bank account
Don’t forget to register for PAYE and VAT, if appropriate.
There's a lot of work that goes into forming and managing a limited company so getting an accountant could be a great way to save some time by staying on top of the all important finances.
The content of this post is up to date and relevant as at 04/09/2018.
Please be aware that information provided by this blog is subject to regular legal and regulatory change. We recommend that you do not take any information held within our website or guides (eBooks) as a definitive guide to the law on the relevant matter being discussed. We suggest your course of action should be to seek legal or professional advice where necessary rather than relying on the content supplied by the author(s) of this blog.